Average
taxpayers in California are probably aware that the state budget was in the
news again over the weekend. But even folks who follow both Presidential
politics and local issues probably couldn’t be blamed if they tune out stories
about the California budget. It’s not that they don’t care. It’s just that
public finance issues can be horribly confusing and difficult to follow.

In terms of
timing, the process itself is easy to grasp. The annual budget year runs from
July 1st to June 30th of the following year. That’s why people refer to a
single budget using two years. For example, the budget currently being
discussed is the 2016-2017 budget. The Constitution requires that the Governor
present a budget in January and that the Legislature enact the budget by June
15th. Because state bean counters and analysts don’t have a full grasp of the
economy or revenue projections in January, the Governor’s budget goes through
an update, or “revision,” in May. It was this May “revise” that the Governor
presented on Friday that has been in the latest news cycle.

But perhaps the
most confusing aspect of the state budget is the fact that many of the numbers
that are bandied about are inconsistent. Thus, an average citizen might hear on
the radio that the state budget is $122 billion dollars. And yet, when they get
home, they read that spending is actually $173 billion. At this point they are
more apt to turn on the Giants v. Dodgers game rather than make sense of the
huge disparity.

The
inconsistency in these budget numbers usually is attributable to the fact that
there is a big difference between “general fund” spending and total state
spending which includes “special funds.” General fund revenue comes from the
state income tax, sales tax, corporate tax and a handful of other sources.
“Special funds” come from the gas tax and fees from regulatory programs like
cap and trade funds. For average taxpayers, the worst example of “special fund”
revenue consists of the illegal CalFire “fee” which slams property owners with
hundreds of dollars of additional property taxes. The legality of the CalFire
fee is currently being challenged in court.

When it comes to
the state budget, citizen taxpayers are justified in being both confused and
angry. Not a day goes by without some scandal surfacing about those who spend
our tax dollars. Whether it is the Bay Bridge, which exceeded the original cost
estimate by a factor of six, or California’s feckless policies that have driven
up state debt so high that, were the state a private company, it would be
immediately eligible for bankruptcy.

As should be
expected, California has the largest state budget in the United States. But
what should not be expected or tolerated is the hostility of our political
leaders toward those of us who pay the bills. California has the highest income
tax rate in America as well as the highest state sales tax. Our fuel costs are
also the highest due to both the current gas tax and environment regulations.
The result of these policies has been an accelerated exodus from the state by
both businesses and individuals. It should be painfully obvious even to the
Governor and left-leaning legislators that you can’t have a vibrant state
budget unless you have a vibrant economy.

Finally,
Governor Brown, while not officially endorsing a proposal to retain California’s
sky-high income tax rates, implicitly endorsed it by noting that the state
would be in a deficit situation if the measure didn’t pass in California.
But this deficit projection is only attributable to higher state costs due to
the foolish policies of elected leaders, not state revenues which are actually
increasing faster than population and inflation.

The real cure
for California’s budget woes is a combination of policies that would make
California competitive in the global economy, not higher taxes and more
burdensome regulations.